US corporate bonds performed well last year with both investment grade and high-yield spreads narrowing in 2023. Indeed, the 12-month breakeven spreads are relatively low – especially in the case of investment grade.…
We update our inflation forecast following this morning’s CPI report.
The combined US credit impulse and fiscal thrust indicator will likely relapse in 2024, heralding growth weakness. Stalling US sales volume and falling inflation, combined with sticky labor costs, will herald a non-trivial profit…
The Fed faces a dilemma. Cut rates early to avoid a recession, but at the risk of not slaying wage inflation. Or, not cut rates early to ensure that wage inflation is slayed, but at the risk of a downturn. Faced with such a dilemma,…
After sinking to a low in October last year, the S&P 500 rallied by 15.84 % by year end, but that rally has faded in the new year. Against the backdrop of increasing belief in the soft-landing narrative, this correction has…
BCA Research’s US Bond Strategy service recommends investors keep portfolio duration close to benchmark for now. They will increase rate exposure as the labor market downturn worsens. Treasury yields are up slightly to…
Our Portfolio Allocation Summary for January 2024.
Following today’s US jobs data release, the Joshi rule real-time US recession indicator inched up to 0.18 and is now just a whisker from its recession event-horizon of 0.20.
A soft landing can be achieved but not maintained. We are cutting our tactical recommendation on stocks from overweight to neutral and scaling back our long-duration stance.
The market is excited by the idea that the Fed will cut rates early this year, even without a recession. But is that likely, with inflation still set to be around 2.8% mid-year?